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91_HB1120
LRB9100524PTpkA
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
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1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
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1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
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1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and.
7 (X) For taxable year 1999 and thereafter, an
8 amount equal to the amount of any (i) distributions,
9 to the extent includible in gross income for federal
10 income tax purposes, made to the taxpayer because of
11 his or her status as a victim of Nazi persecution,
12 as defined in Public Law 103-286, or as a spouse or
13 a descendant in need of such victim and (ii) items
14 of income, to the extent includible in gross income
15 for federal income tax purposes, attributable to,
16 derived from or in any way related to assets stolen
17 from, hidden from, or otherwise lost to a victim of
18 Nazi persecution, as defined in Public Law 103-286,
19 immediately prior to, during, and immediately after
20 World War II, including, but not limited to,
21 interest on the proceeds receivable as insurance
22 under policies issued to a victim of Nazi
23 persecution, as defined in Public Law 103-286, by
24 European insurance companies immediately prior to
25 and during World War II; provided, however, this
26 subtraction from federal adjusted gross income does
27 not apply to assets acquired with such assets or
28 with the proceeds from the sale of such assets;
29 provided, further, this paragraph shall only apply
30 to a taxpayer who was the first recipient of such
31 assets after their recovery and who is a victim of
32 Nazi persecution, as defined in Public Law 103-286,
33 or a spouse or a descendant of such victim. The
34 amount of and the eligibility for any public
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1 assistance, benefit, or similar entitlement is not
2 affected by the inclusion of items (i) and (ii) of
3 this paragraph in gross income for federal income
4 tax purposes. This paragraph is exempt from the
5 provisions of Section 250.
6 (b) Corporations.
7 (1) In general. In the case of a corporation, base
8 income means an amount equal to the taxpayer's taxable
9 income for the taxable year as modified by paragraph (2).
10 (2) Modifications. The taxable income referred to
11 in paragraph (1) shall be modified by adding thereto the
12 sum of the following amounts:
13 (A) An amount equal to all amounts paid or
14 accrued to the taxpayer as interest and all
15 distributions received from regulated investment
16 companies during the taxable year to the extent
17 excluded from gross income in the computation of
18 taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income in the computation of taxable income
22 for the taxable year;
23 (C) In the case of a regulated investment
24 company, an amount equal to the excess of (i) the
25 net long-term capital gain for the taxable year,
26 over (ii) the amount of the capital gain dividends
27 designated as such in accordance with Section
28 852(b)(3)(C) of the Internal Revenue Code and any
29 amount designated under Section 852(b)(3)(D) of the
30 Internal Revenue Code, attributable to the taxable
31 year. (this amendatory Act of 1995 (Public Act
32 89-89) is declarative of existing law and is not a
33 new enactment);.
34 (D) The amount of any net operating loss
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1 deduction taken in arriving at taxable income, other
2 than a net operating loss carried forward from a
3 taxable year ending prior to December 31, 1986; and
4 (E) For taxable years in which a net operating
5 loss carryback or carryforward from a taxable year
6 ending prior to December 31, 1986 is an element of
7 taxable income under paragraph (1) of subsection (e)
8 or subparagraph (E) of paragraph (2) of subsection
9 (e), the amount by which addition modifications
10 other than those provided by this subparagraph (E)
11 exceeded subtraction modifications in such earlier
12 taxable year, with the following limitations applied
13 in the order that they are listed:
14 (i) the addition modification relating to
15 the net operating loss carried back or forward
16 to the taxable year from any taxable year
17 ending prior to December 31, 1986 shall be
18 reduced by the amount of addition modification
19 under this subparagraph (E) which related to
20 that net operating loss and which was taken
21 into account in calculating the base income of
22 an earlier taxable year, and
23 (ii) the addition modification relating
24 to the net operating loss carried back or
25 forward to the taxable year from any taxable
26 year ending prior to December 31, 1986 shall
27 not exceed the amount of such carryback or
28 carryforward;
29 For taxable years in which there is a net
30 operating loss carryback or carryforward from more
31 than one other taxable year ending prior to December
32 31, 1986, the addition modification provided in this
33 subparagraph (E) shall be the sum of the amounts
34 computed independently under the preceding
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1 provisions of this subparagraph (E) for each such
2 taxable year;, and
3 (E-5) For taxable years ending after December
4 31, 1997, an amount equal to any eligible
5 remediation costs that the corporation deducted in
6 computing adjusted gross income and for which the
7 corporation claims a credit under subsection (l) of
8 Section 201;
9 and by deducting from the total so obtained the sum of
10 the following amounts:
11 (F) An amount equal to the amount of any tax
12 imposed by this Act which was refunded to the
13 taxpayer and included in such total for the taxable
14 year;
15 (G) An amount equal to any amount included in
16 such total under Section 78 of the Internal Revenue
17 Code;
18 (H) In the case of a regulated investment
19 company, an amount equal to the amount of exempt
20 interest dividends as defined in subsection (b) (5)
21 of Section 852 of the Internal Revenue Code, paid to
22 shareholders for the taxable year;
23 (I) With the exception of any amounts
24 subtracted under subparagraph (J), an amount equal
25 to the sum of all amounts disallowed as deductions
26 by Sections 171(a) (2), and 265(a)(2) and amounts
27 disallowed as interest expense by Section 291(a)(3)
28 of the Internal Revenue Code, as now or hereafter
29 amended, and all amounts of expenses allocable to
30 interest and disallowed as deductions by Section
31 265(a)(1) of the Internal Revenue Code, as now or
32 hereafter amended;
33 (J) An amount equal to all amounts included in
34 such total which are exempt from taxation by this
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1 State either by reason of its statutes or
2 Constitution or by reason of the Constitution,
3 treaties or statutes of the United States; provided
4 that, in the case of any statute of this State that
5 exempts income derived from bonds or other
6 obligations from the tax imposed under this Act, the
7 amount exempted shall be the interest net of bond
8 premium amortization;
9 (K) An amount equal to those dividends
10 included in such total which were paid by a
11 corporation which conducts business operations in an
12 Enterprise Zone or zones created under the Illinois
13 Enterprise Zone Act and conducts substantially all
14 of its operations in an Enterprise Zone or zones;
15 (L) An amount equal to those dividends
16 included in such total that were paid by a
17 corporation that conducts business operations in a
18 federally designated Foreign Trade Zone or Sub-Zone
19 and that is designated a High Impact Business
20 located in Illinois; provided that dividends
21 eligible for the deduction provided in subparagraph
22 (K) of paragraph 2 of this subsection shall not be
23 eligible for the deduction provided under this
24 subparagraph (L);
25 (M) For any taxpayer that is a financial
26 organization within the meaning of Section 304(c) of
27 this Act, an amount included in such total as
28 interest income from a loan or loans made by such
29 taxpayer to a borrower, to the extent that such a
30 loan is secured by property which is eligible for
31 the Enterprise Zone Investment Credit. To determine
32 the portion of a loan or loans that is secured by
33 property eligible for a Section 201(h) investment
34 credit to the borrower, the entire principal amount
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1 of the loan or loans between the taxpayer and the
2 borrower should be divided into the basis of the
3 Section 201(h) investment credit property which
4 secures the loan or loans, using for this purpose
5 the original basis of such property on the date that
6 it was placed in service in the Enterprise Zone.
7 The subtraction modification available to taxpayer
8 in any year under this subsection shall be that
9 portion of the total interest paid by the borrower
10 with respect to such loan attributable to the
11 eligible property as calculated under the previous
12 sentence;
13 (M-1) For any taxpayer that is a financial
14 organization within the meaning of Section 304(c) of
15 this Act, an amount included in such total as
16 interest income from a loan or loans made by such
17 taxpayer to a borrower, to the extent that such a
18 loan is secured by property which is eligible for
19 the High Impact Business Investment Credit. To
20 determine the portion of a loan or loans that is
21 secured by property eligible for a Section 201(i)
22 investment credit to the borrower, the entire
23 principal amount of the loan or loans between the
24 taxpayer and the borrower should be divided into the
25 basis of the Section 201(i) investment credit
26 property which secures the loan or loans, using for
27 this purpose the original basis of such property on
28 the date that it was placed in service in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 located in Illinois. No taxpayer that is eligible
31 for the deduction provided in subparagraph (M) of
32 paragraph (2) of this subsection shall be eligible
33 for the deduction provided under this subparagraph
34 (M-1). The subtraction modification available to
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1 taxpayers in any year under this subsection shall be
2 that portion of the total interest paid by the
3 borrower with respect to such loan attributable to
4 the eligible property as calculated under the
5 previous sentence;
6 (N) Two times any contribution made during the
7 taxable year to a designated zone organization to
8 the extent that the contribution (i) qualifies as a
9 charitable contribution under subsection (c) of
10 Section 170 of the Internal Revenue Code and (ii)
11 must, by its terms, be used for a project approved
12 by the Department of Commerce and Community Affairs
13 under Section 11 of the Illinois Enterprise Zone
14 Act;
15 (O) An amount equal to: (i) 85% for taxable
16 years ending on or before December 31, 1992, or, a
17 percentage equal to the percentage allowable under
18 Section 243(a)(1) of the Internal Revenue Code of
19 1986 for taxable years ending after December 31,
20 1992, of the amount by which dividends included in
21 taxable income and received from a corporation that
22 is not created or organized under the laws of the
23 United States or any state or political subdivision
24 thereof, including, for taxable years ending on or
25 after December 31, 1988, dividends received or
26 deemed received or paid or deemed paid under
27 Sections 951 through 964 of the Internal Revenue
28 Code, exceed the amount of the modification provided
29 under subparagraph (G) of paragraph (2) of this
30 subsection (b) which is related to such dividends;
31 plus (ii) 100% of the amount by which dividends,
32 included in taxable income and received, including,
33 for taxable years ending on or after December 31,
34 1988, dividends received or deemed received or paid
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1 or deemed paid under Sections 951 through 964 of the
2 Internal Revenue Code, from any such corporation
3 specified in clause (i) that would but for the
4 provisions of Section 1504 (b) (3) of the Internal
5 Revenue Code be treated as a member of the
6 affiliated group which includes the dividend
7 recipient, exceed the amount of the modification
8 provided under subparagraph (G) of paragraph (2) of
9 this subsection (b) which is related to such
10 dividends;
11 (P) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Tax Increment Allocation Redevelopment Act; and
14 (Q) An amount equal to the amount of the
15 deduction used to compute the federal income tax
16 credit for restoration of substantial amounts held
17 under claim of right for the taxable year pursuant
18 to Section 1341 of the Internal Revenue Code of
19 1986.
20 (3) Special rule. For purposes of paragraph (2)
21 (A), "gross income" in the case of a life insurance
22 company, for tax years ending on and after December 31,
23 1994, shall mean the gross investment income for the
24 taxable year.
25 (c) Trusts and estates.
26 (1) In general. In the case of a trust or estate,
27 base income means an amount equal to the taxpayer's
28 taxable income for the taxable year as modified by
29 paragraph (2).
30 (2) Modifications. Subject to the provisions of
31 paragraph (3), the taxable income referred to in
32 paragraph (1) shall be modified by adding thereto the sum
33 of the following amounts:
34 (A) An amount equal to all amounts paid or
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1 accrued to the taxpayer as interest or dividends
2 during the taxable year to the extent excluded from
3 gross income in the computation of taxable income;
4 (B) In the case of (i) an estate, $600; (ii) a
5 trust which, under its governing instrument, is
6 required to distribute all of its income currently,
7 $300; and (iii) any other trust, $100, but in each
8 such case, only to the extent such amount was
9 deducted in the computation of taxable income;
10 (C) An amount equal to the amount of tax
11 imposed by this Act to the extent deducted from
12 gross income in the computation of taxable income
13 for the taxable year;
14 (D) The amount of any net operating loss
15 deduction taken in arriving at taxable income, other
16 than a net operating loss carried forward from a
17 taxable year ending prior to December 31, 1986;
18 (E) For taxable years in which a net operating
19 loss carryback or carryforward from a taxable year
20 ending prior to December 31, 1986 is an element of
21 taxable income under paragraph (1) of subsection (e)
22 or subparagraph (E) of paragraph (2) of subsection
23 (e), the amount by which addition modifications
24 other than those provided by this subparagraph (E)
25 exceeded subtraction modifications in such taxable
26 year, with the following limitations applied in the
27 order that they are listed:
28 (i) the addition modification relating to
29 the net operating loss carried back or forward
30 to the taxable year from any taxable year
31 ending prior to December 31, 1986 shall be
32 reduced by the amount of addition modification
33 under this subparagraph (E) which related to
34 that net operating loss and which was taken
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1 into account in calculating the base income of
2 an earlier taxable year, and
3 (ii) the addition modification relating
4 to the net operating loss carried back or
5 forward to the taxable year from any taxable
6 year ending prior to December 31, 1986 shall
7 not exceed the amount of such carryback or
8 carryforward;
9 For taxable years in which there is a net
10 operating loss carryback or carryforward from more
11 than one other taxable year ending prior to December
12 31, 1986, the addition modification provided in this
13 subparagraph (E) shall be the sum of the amounts
14 computed independently under the preceding
15 provisions of this subparagraph (E) for each such
16 taxable year;
17 (F) For taxable years ending on or after
18 January 1, 1989, an amount equal to the tax deducted
19 pursuant to Section 164 of the Internal Revenue Code
20 if the trust or estate is claiming the same tax for
21 purposes of the Illinois foreign tax credit under
22 Section 601 of this Act;
23 (G) An amount equal to the amount of the
24 capital gain deduction allowable under the Internal
25 Revenue Code, to the extent deducted from gross
26 income in the computation of taxable income; and
27 (G-5) For taxable years ending after December
28 31, 1997, an amount equal to any eligible
29 remediation costs that the trust or estate deducted
30 in computing adjusted gross income and for which the
31 trust or estate claims a credit under subsection (l)
32 of Section 201;
33 and by deducting from the total so obtained the sum of
34 the following amounts:
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1 (H) An amount equal to all amounts included in
2 such total pursuant to the provisions of Sections
3 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
4 408 of the Internal Revenue Code or included in such
5 total as distributions under the provisions of any
6 retirement or disability plan for employees of any
7 governmental agency or unit, or retirement payments
8 to retired partners, which payments are excluded in
9 computing net earnings from self employment by
10 Section 1402 of the Internal Revenue Code and
11 regulations adopted pursuant thereto;
12 (I) The valuation limitation amount;
13 (J) An amount equal to the amount of any tax
14 imposed by this Act which was refunded to the
15 taxpayer and included in such total for the taxable
16 year;
17 (K) An amount equal to all amounts included in
18 taxable income as modified by subparagraphs (A),
19 (B), (C), (D), (E), (F) and (G) which are exempt
20 from taxation by this State either by reason of its
21 statutes or Constitution or by reason of the
22 Constitution, treaties or statutes of the United
23 States; provided that, in the case of any statute of
24 this State that exempts income derived from bonds or
25 other obligations from the tax imposed under this
26 Act, the amount exempted shall be the interest net
27 of bond premium amortization;
28 (L) With the exception of any amounts
29 subtracted under subparagraph (K), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2) and 265(a)(2) of the Internal
32 Revenue Code, as now or hereafter amended, and all
33 amounts of expenses allocable to interest and
34 disallowed as deductions by Section 265(1) of the
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1 Internal Revenue Code of 1954, as now or hereafter
2 amended;
3 (M) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act and conducts substantially all
8 of its operations in an Enterprise Zone or Zones;
9 (N) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Tax Increment Allocation Redevelopment Act;
12 (O) An amount equal to those dividends
13 included in such total that were paid by a
14 corporation that conducts business operations in a
15 federally designated Foreign Trade Zone or Sub-Zone
16 and that is designated a High Impact Business
17 located in Illinois; provided that dividends
18 eligible for the deduction provided in subparagraph
19 (M) of paragraph (2) of this subsection shall not be
20 eligible for the deduction provided under this
21 subparagraph (O); and
22 (P) An amount equal to the amount of the
23 deduction used to compute the federal income tax
24 credit for restoration of substantial amounts held
25 under claim of right for the taxable year pursuant
26 to Section 1341 of the Internal Revenue Code of 1986
27 ; and.
28 (Q) For taxable year 1999 and thereafter, an
29 amount equal to the amount of any (i) distributions,
30 to the extent includible in gross income for federal
31 income tax purposes, made to the taxpayer because of
32 his or her status as a victim of Nazi persecution,
33 as defined in Public Law 103-286, or as a spouse or
34 a descendant in need of such victim and (ii) items
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1 of income, to the extent includible in gross income
2 for federal income tax purposes, attributable to,
3 derived from or in any way related to assets stolen
4 from, hidden from, or otherwise lost to a victim of
5 Nazi persecution, as defined in Public Law 103-286,
6 immediately prior to, during, and immediately after
7 World War II, including, but not limited to,
8 interest on the proceeds receivable as insurance
9 under policies issued to a victim of Nazi
10 persecution, as defined in Public Law 103-286, by
11 European insurance companies immediately prior to
12 and during World War II; provided, however, this
13 subtraction from federal adjusted gross income does
14 not apply to assets acquired with such assets or
15 with the proceeds from the sale of such assets;
16 provided, further, this paragraph shall only apply
17 to a taxpayer who was the first recipient of such
18 assets after their recovery and who is a victim of
19 Nazi persecution, as defined in Public Law 103-286,
20 or a spouse or a descendant of such victim. The
21 amount of and the eligibility for any public
22 assistance, benefit, or similar entitlement is not
23 affected by the inclusion of items (i) and (ii) of
24 this paragraph in gross income for federal income
25 tax purposes. This paragraph is exempt from the
26 provisions of Section 250.
27 (3) Limitation. The amount of any modification
28 otherwise required under this subsection shall, under
29 regulations prescribed by the Department, be adjusted by
30 any amounts included therein which were properly paid,
31 credited, or required to be distributed, or permanently
32 set aside for charitable purposes pursuant to Internal
33 Revenue Code Section 642(c) during the taxable year.
34 (d) Partnerships.
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1 (1) In general. In the case of a partnership, base
2 income means an amount equal to the taxpayer's taxable
3 income for the taxable year as modified by paragraph (2).
4 (2) Modifications. The taxable income referred to
5 in paragraph (1) shall be modified by adding thereto the
6 sum of the following amounts:
7 (A) An amount equal to all amounts paid or
8 accrued to the taxpayer as interest or dividends
9 during the taxable year to the extent excluded from
10 gross income in the computation of taxable income;
11 (B) An amount equal to the amount of tax
12 imposed by this Act to the extent deducted from
13 gross income for the taxable year; and
14 (C) The amount of deductions allowed to the
15 partnership pursuant to Section 707 (c) of the
16 Internal Revenue Code in calculating its taxable
17 income; and
18 (D) An amount equal to the amount of the
19 capital gain deduction allowable under the Internal
20 Revenue Code, to the extent deducted from gross
21 income in the computation of taxable income;
22 and by deducting from the total so obtained the following
23 amounts:
24 (E) The valuation limitation amount;
25 (F) An amount equal to the amount of any tax
26 imposed by this Act which was refunded to the
27 taxpayer and included in such total for the taxable
28 year;
29 (G) An amount equal to all amounts included in
30 taxable income as modified by subparagraphs (A),
31 (B), (C) and (D) which are exempt from taxation by
32 this State either by reason of its statutes or
33 Constitution or by reason of the Constitution,
34 treaties or statutes of the United States; provided
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1 that, in the case of any statute of this State that
2 exempts income derived from bonds or other
3 obligations from the tax imposed under this Act, the
4 amount exempted shall be the interest net of bond
5 premium amortization;
6 (H) Any income of the partnership which
7 constitutes personal service income as defined in
8 Section 1348 (b) (1) of the Internal Revenue Code
9 (as in effect December 31, 1981) or a reasonable
10 allowance for compensation paid or accrued for
11 services rendered by partners to the partnership,
12 whichever is greater;
13 (I) An amount equal to all amounts of income
14 distributable to an entity subject to the Personal
15 Property Tax Replacement Income Tax imposed by
16 subsections (c) and (d) of Section 201 of this Act
17 including amounts distributable to organizations
18 exempt from federal income tax by reason of Section
19 501(a) of the Internal Revenue Code;
20 (J) With the exception of any amounts
21 subtracted under subparagraph (G), an amount equal
22 to the sum of all amounts disallowed as deductions
23 by Sections 171(a) (2), and 265(2) of the Internal
24 Revenue Code of 1954, as now or hereafter amended,
25 and all amounts of expenses allocable to interest
26 and disallowed as deductions by Section 265(1) of
27 the Internal Revenue Code, as now or hereafter
28 amended;
29 (K) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, enacted by the 82nd General
34 Assembly, and which does not conduct such operations
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1 other than in an Enterprise Zone or Zones;
2 (L) An amount equal to any contribution made
3 to a job training project established pursuant to
4 the Real Property Tax Increment Allocation
5 Redevelopment Act;
6 (M) An amount equal to those dividends
7 included in such total that were paid by a
8 corporation that conducts business operations in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 and that is designated a High Impact Business
11 located in Illinois; provided that dividends
12 eligible for the deduction provided in subparagraph
13 (K) of paragraph (2) of this subsection shall not be
14 eligible for the deduction provided under this
15 subparagraph (M); and
16 (N) An amount equal to the amount of the
17 deduction used to compute the federal income tax
18 credit for restoration of substantial amounts held
19 under claim of right for the taxable year pursuant
20 to Section 1341 of the Internal Revenue Code of
21 1986.
22 (e) Gross income; adjusted gross income; taxable income.
23 (1) In general. Subject to the provisions of
24 paragraph (2) and subsection (b) (3), for purposes of
25 this Section and Section 803(e), a taxpayer's gross
26 income, adjusted gross income, or taxable income for the
27 taxable year shall mean the amount of gross income,
28 adjusted gross income or taxable income properly
29 reportable for federal income tax purposes for the
30 taxable year under the provisions of the Internal Revenue
31 Code. Taxable income may be less than zero. However, for
32 taxable years ending on or after December 31, 1986, net
33 operating loss carryforwards from taxable years ending
34 prior to December 31, 1986, may not exceed the sum of
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1 federal taxable income for the taxable year before net
2 operating loss deduction, plus the excess of addition
3 modifications over subtraction modifications for the
4 taxable year. For taxable years ending prior to December
5 31, 1986, taxable income may never be an amount in excess
6 of the net operating loss for the taxable year as defined
7 in subsections (c) and (d) of Section 172 of the Internal
8 Revenue Code, provided that when taxable income of a
9 corporation (other than a Subchapter S corporation),
10 trust, or estate is less than zero and addition
11 modifications, other than those provided by subparagraph
12 (E) of paragraph (2) of subsection (b) for corporations
13 or subparagraph (E) of paragraph (2) of subsection (c)
14 for trusts and estates, exceed subtraction modifications,
15 an addition modification must be made under those
16 subparagraphs for any other taxable year to which the
17 taxable income less than zero (net operating loss) is
18 applied under Section 172 of the Internal Revenue Code or
19 under subparagraph (E) of paragraph (2) of this
20 subsection (e) applied in conjunction with Section 172 of
21 the Internal Revenue Code.
22 (2) Special rule. For purposes of paragraph (1) of
23 this subsection, the taxable income properly reportable
24 for federal income tax purposes shall mean:
25 (A) Certain life insurance companies. In the
26 case of a life insurance company subject to the tax
27 imposed by Section 801 of the Internal Revenue Code,
28 life insurance company taxable income, plus the
29 amount of distribution from pre-1984 policyholder
30 surplus accounts as calculated under Section 815a of
31 the Internal Revenue Code;
32 (B) Certain other insurance companies. In the
33 case of mutual insurance companies subject to the
34 tax imposed by Section 831 of the Internal Revenue
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1 Code, insurance company taxable income;
2 (C) Regulated investment companies. In the
3 case of a regulated investment company subject to
4 the tax imposed by Section 852 of the Internal
5 Revenue Code, investment company taxable income;
6 (D) Real estate investment trusts. In the
7 case of a real estate investment trust subject to
8 the tax imposed by Section 857 of the Internal
9 Revenue Code, real estate investment trust taxable
10 income;
11 (E) Consolidated corporations. In the case of
12 a corporation which is a member of an affiliated
13 group of corporations filing a consolidated income
14 tax return for the taxable year for federal income
15 tax purposes, taxable income determined as if such
16 corporation had filed a separate return for federal
17 income tax purposes for the taxable year and each
18 preceding taxable year for which it was a member of
19 an affiliated group. For purposes of this
20 subparagraph, the taxpayer's separate taxable income
21 shall be determined as if the election provided by
22 Section 243(b) (2) of the Internal Revenue Code had
23 been in effect for all such years;
24 (F) Cooperatives. In the case of a
25 cooperative corporation or association, the taxable
26 income of such organization determined in accordance
27 with the provisions of Section 1381 through 1388 of
28 the Internal Revenue Code;
29 (G) Subchapter S corporations. In the case
30 of: (i) a Subchapter S corporation for which there
31 is in effect an election for the taxable year under
32 Section 1362 of the Internal Revenue Code, the
33 taxable income of such corporation determined in
34 accordance with Section 1363(b) of the Internal
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1 Revenue Code, except that taxable income shall take
2 into account those items which are required by
3 Section 1363(b)(1) of the Internal Revenue Code to
4 be separately stated; and (ii) a Subchapter S
5 corporation for which there is in effect a federal
6 election to opt out of the provisions of the
7 Subchapter S Revision Act of 1982 and have applied
8 instead the prior federal Subchapter S rules as in
9 effect on July 1, 1982, the taxable income of such
10 corporation determined in accordance with the
11 federal Subchapter S rules as in effect on July 1,
12 1982; and
13 (H) Partnerships. In the case of a
14 partnership, taxable income determined in accordance
15 with Section 703 of the Internal Revenue Code,
16 except that taxable income shall take into account
17 those items which are required by Section 703(a)(1)
18 to be separately stated but which would be taken
19 into account by an individual in calculating his
20 taxable income.
21 (f) Valuation limitation amount.
22 (1) In general. The valuation limitation amount
23 referred to in subsections (a) (2) (G), (c) (2) (I) and
24 (d)(2) (E) is an amount equal to:
25 (A) The sum of the pre-August 1, 1969
26 appreciation amounts (to the extent consisting of
27 gain reportable under the provisions of Section 1245
28 or 1250 of the Internal Revenue Code) for all
29 property in respect of which such gain was reported
30 for the taxable year; plus
31 (B) The lesser of (i) the sum of the
32 pre-August 1, 1969 appreciation amounts (to the
33 extent consisting of capital gain) for all property
34 in respect of which such gain was reported for
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1 federal income tax purposes for the taxable year, or
2 (ii) the net capital gain for the taxable year,
3 reduced in either case by any amount of such gain
4 included in the amount determined under subsection
5 (a) (2) (F) or (c) (2) (H).
6 (2) Pre-August 1, 1969 appreciation amount.
7 (A) If the fair market value of property
8 referred to in paragraph (1) was readily
9 ascertainable on August 1, 1969, the pre-August 1,
10 1969 appreciation amount for such property is the
11 lesser of (i) the excess of such fair market value
12 over the taxpayer's basis (for determining gain) for
13 such property on that date (determined under the
14 Internal Revenue Code as in effect on that date), or
15 (ii) the total gain realized and reportable for
16 federal income tax purposes in respect of the sale,
17 exchange or other disposition of such property.
18 (B) If the fair market value of property
19 referred to in paragraph (1) was not readily
20 ascertainable on August 1, 1969, the pre-August 1,
21 1969 appreciation amount for such property is that
22 amount which bears the same ratio to the total gain
23 reported in respect of the property for federal
24 income tax purposes for the taxable year, as the
25 number of full calendar months in that part of the
26 taxpayer's holding period for the property ending
27 July 31, 1969 bears to the number of full calendar
28 months in the taxpayer's entire holding period for
29 the property.
30 (C) The Department shall prescribe such
31 regulations as may be necessary to carry out the
32 purposes of this paragraph.
33 (g) Double deductions. Unless specifically provided
34 otherwise, nothing in this Section shall permit the same item
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1 to be deducted more than once.
2 (h) Legislative intention. Except as expressly provided
3 by this Section there shall be no modifications or
4 limitations on the amounts of income, gain, loss or deduction
5 taken into account in determining gross income, adjusted
6 gross income or taxable income for federal income tax
7 purposes for the taxable year, or in the amount of such items
8 entering into the computation of base income and net income
9 under this Act for such taxable year, whether in respect of
10 property values as of August 1, 1969 or otherwise.
11 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
12 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
13 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
14 eff. 8-14-98; revised 9-21-98.)
15 Section 99. Effective date. This Act takes effect upon
16 becoming law.